Employee’s Sexual Assault against Three Separate Women Constitutes Single Occurrence

A unanimous Sixth Circuit panel, applying Ohio law, held that three sexual assault claims by three separate women against an employee of The Scott Fetzer Company (“Fetzer”), represented a single occurrence under Fetzer’s general liability policies. In so doing, the court reversed the lower court decision that held each instance of sexual assault was a separate occurrence under the policies.

The policies stated that Fetzer would pay the first $1 million of each “occurrence” while Fetzer’s insurer, Zurich American Insurance Co. (“Zurich”), would pay the remaining amount up to $2 million.  A dispute arose after Fetzer settled with all three women and sought reimbursement from Zurich for the amount over $1 million. Zurich agreed to pay its share of the first settlement but refused to pay anything towards the remaining two settlements. Zurich argued that each of the sexual assault claims was a separate “occurrence” and because the remaining two settlements did not exceed the deductible, Zurich was not liable.

Fetzer, however, argued that the claims represented a single “occurrence” under the policies. Specifically, Fetzer asserted that its negligence in hiring and supervising the employee was the relevant “occurrence,” not the three separate sexual assault claims. As a result, Zurich should be liable for the full cost of the final two settlements. 

The Six Circuit agreed with Fetzer’s interpretation of the policy. In coming to this conclusion, the court relied on two principles of insurance contract interpretation: (1) where there are multiple reasonable interpretations of a provision, the provision must be interpreted in favor of the insured and against the insurer, and (2) where an insurer seeks to deny coverage based on a specific provision, the insurer must show that its interpretation of the provision is the only reasonable interpretation. It was not necessary for the court to determine if Fetzer’s interpretation was the best interpretation; instead, Fetzer’s interpretation only need be reasonable.

In holding that Fetzer’s interpretation was reasonable, the court looked to other jurisdictions. First, the court cited a Supreme Court of Pennsylvania case that held the failure of parents to supervise their son when he shot several people was one “occurrence” – each victim did not represent a separate occurrence under the policy. Second, the court cited a Seventh Circuit decision that held that negligently supervising an employee was a single “occurrence” under Rhode Island law – each instance of the employee’s misconduct did not constitute a separate occurrence.

The court also reviewed the plain language reading of “occurrence.” After examining several cases where negligent supervision was interpreted as an “occurrence,” the court concluded that Fetzer’s position that its negligent supervision was the relevant “occurrence” was reasonable.

For these reasons, the court found Zurich liable for the cost of the final two settlements. The Scott Fetzer Co. v. Zurich Am. Ins. Co., No. 18-3057 (6th Cir. Apr. 30, 2019).